According to Keynes, contractionary monetary policy
A. impacts the economy by an amount larger than the change in investment.
B. will have no impact on the equilibrium real GDP.
C. impacts the economy by an amount smaller than the change in investment.
D. will have no impact on the equilibrium nominal GDP.
Answer: A
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You rent a DVD of The Dark Knight Rises. The rental is for seven days and you watch the movie on the first day. You tell a friend about the film and your friend asks to come over and watch the movie with you before it is due back
What is your opportunity cost if you decide to watch the movie a second time instead of going to a football game? A) the entire cost of the movie rental, since you have already watched the movie B) one half the rental cost, because you have already watched the movie one time C) The answer depends on how much you liked the movie in the first place. D) the football game you forego by watching the movie again
Comment on the following statement: "A decrease in supply will lead to an increase in the price which decreases demand, thus lowering price. Therefore, a decrease in supply has no effect on the price of a good."
What will be an ideal response?
The exchange rate between currencies depends on
A) the interest rate that can be earned on deposits of those currencies. B) the interest rate that can be earned on deposits of those currencies and the expected future exchange rate. C) the expected future exchange rate. D) national output. E) the interest rate that can be earned on deposits of those countries and the national output.
Having more relevant instruments
A) is a problem because instead of being just identified, the regression now becomes overidentified. B) is like having a larger sample size in that the more information is available for use in the IV regressions. C) typically results in larger standard errors for the TSLS estimator. D) is not as important for inference as having the same number of endogenous variables as instruments.